US stocks gained following last week's tariff exemptions and with dovish comments from Fed's Waller - Newsquawk Asia-Pac Market Open

US stocks gained with sentiment underpinned after last week's announcement of tariff exemptions for smartphones and electronics, although President Trump clarified they are still subject to the 20% tariff related to fentanyl. Equity futures hit peaks around the opening bell, but a soft open saw the upside pare by the time Europe left for the day, while there were tailwinds later in the session as participants digested dovish comments from Fed's Waller which facilitated further upside in T-notes.
USD price action was choppy to start the week, but was ultimately lower with DXY languishing beneath the 100.00 level after the Trump administration announced exemptions on smartphones and electronics, although Trump has since clarified there was no ‘exception’ and nobody is getting “off the hook”, with electronics and smartphones subject to 20% fentanyl-related tariffs. There were also comments from Fed's Waller who gave a range of scenarios in which he noted that under a large-tariff scenario with a significant economic slowdown, he would favour cutting the policy rate sooner and greater than previously thought.
Looking ahead, highlights include New Zealand Food Prices, South Korean Trade Data, RBA Minutes, Comments from Fed's Harker & Bostic, Supply from Japan.

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LOOKING AHEAD

Highlights include New Zealand Food Prices, South Korean Trade Data, RBA Minutes, Comments from Fed's Harker & Bostic, Supply from Japan.
Click for the Newsquawk Week Ahead.

US TRADE

US stocks gained with sentiment underpinned after last week's announcement of tariff exemptions for smartphones and electronics, although President Trump clarified they are still subject to the 20% tariff related to fentanyl. Equity futures hit peaks around the opening bell, but a soft open saw the upside pare by the time Europe left for the day, while there were tailwinds later in the session as participants digested dovish comments from Fed's Waller which facilitated further upside in T-notes.
SPX +0.84% at 5,408, NDX +0.57% at 18,796, DJI +0.78% at 40,525, RUT +1.08% at 1,880.
Click here for a detailed summary.

TRADE/TARIFFS

US President Trump said they will put tariffs on imported pharmaceuticals in the not too distant future and noted they do not make their own drugs, while he reiterated the EU is taking advantage of the US and that the EU has to come to the table which they're trying to.
White House NEC Chair Hassett said the US is aiming at semiconductors that influence national security and noted President Trump will make the decision on when and if to have talks with China, while he added they are making enormous progress on tariff talks with the EU.
EU Trade Commissioner Sefcovic said he is in Washington for talks and is seizing the 90-day window for a mutual solution to unjustified tariffs. Sefcovic added that the EU remains constructive and is ready for a fair deal including reciprocity through their zero-for-zero tariff offer on industrial goods and the work on non-tariff barriers, while he noted that achieving this will require a significant joint effort.

NOTABLE HEADLINES

Fed's Waller (voter) said new tariff policy is one of the biggest shocks to affect the US economy in decades and noted under the large-tariff scenario with significant economic slowdown, he would favour cutting policy rate sooner and more than previously thought. Waller stated that if the current 25% average tariff rate stays for some time, inflation could peak near 5% and in this large-tariff scenario, the drag on output and employment could be longer-lasting and unemployment could climb to 5%. However, in the scenario where tariffs drop down to 10%, inflation could peak at 3%, and under the smaller-tariff scenario, the Fed could be more patient and rate cuts could take place in the latter half of the year. Furthermore, he said policy is highly uncertain and the Fed should remain flexible.
US President Trump reportedly targets NPR, PBS, and foreign aid in USD 9bln spending cut, according to Bloomberg.
House Republicans are set to begin marking up their reconciliation package as soon as Congress returns from the two-week recess, likely to be the week of April 28th, according to Punchbowl sources.
NY Fed Survey of Consumer Inflation Expectations (March): 1-year 3.6% (prev. 3.1%), 3-year 3.0% (prev. 3.0%), 5-year 2.9% (prev. 3.0%).
WSJ's Timiraos wrote "Based on the CPI and PPI readings for March, forecasters who do the math expect a very mild core PCE reading for March. The median forecast is 0.08%".

FX

USD price action was choppy to start the week, but was ultimately lower with DXY languishing beneath the 100.00 level after the Trump administration announced exemptions on smartphones and electronics, although Trump has since clarified there was no ‘exception’ and nobody is getting “off the hook”, with electronics and smartphones subject to 20% fentanyl-related tariffs. There were also comments from Fed's Waller who gave a range of scenarios in which he noted that under a large-tariff scenario with a significant economic slowdown, he would favour cutting the policy rate sooner and greater than previously thought.
EUR marginally softened on the day after failing to sustain a brief return to the 1.1400 territory, while EU Trade Commissioner Sefcovic said he is in Washington for talks and that the EU is ready for a fair deal including reciprocity through their zero-for-zero tariff offer on industrial goods and the work on non-tariff barriers.
GBP strengthened and tested the 1.3200 level against the dollar where it then met some resistance, while participants now await average earnings and jobs data from the UK.
JPY saw two-way price action and strengthened on the day as USD/JPY pulled back from a brief test of the 144.00 level.

FIXED INCOME

T-notes rallied after the US eased tariffs on smartphones and following dovish comments from Fed's Waller.

COMMODITIES

Oil prices were choppy and ultimately settled flat after fading their initial gains throughout US trade.
OPEC MOMR (Mar) showed global oil demand growth forecasts for 2025 and 2026 both revised down by 100k BPD each to 1.3mln BPD, while adjustments were made due to “received data” for Q1 2025 coupled with US tariffs.
Kazakhstan's Energy Ministry said oil output in the first 13 days of April fell 3% from the March average.

GEOPOLITICAL

MIDDLE EAST

US President Trump said they will solve the Iran problem and Iran wants to deal with the US but they don't know how and there will be another meeting with Iran on Saturday. Furthermore, Trump said Iran cannot have a nuclear weapon and must give up the dream of a nuclear weapon or face a harsh response.
Egypt received an Israeli proposal for a ceasefire in Gaza and to start negotiations for a permanent ceasefire, while Egypt delivered the proposal to Hamas and is awaiting a response, according to Al Qahera News.
Israel’s new demand to Hamas is to reportedly lay down weapons as a condition to a ceasefire, which is a new demand that would surely prolong the suffering of the hostages, if not worse, according to Guy Elster.
Hamas official said they are ready to hand over hostages in one batch in exchange for ending the war and withdrawing from Gaza.

RUSSIA-UKRAINE

US President Trump posted on the Russia-Ukraine war in which he stated "Now we have to get it to STOP, AND FAST. SO SAD!", while Trump thinks they will get some very good proposals on stopping the Ukraine war very soon.
Ukraine and the US held "constructive" talks on a proposed minerals deal last week, according to AFP citing an official.

ASIA-PAC